With limited exceptions, almost all employee benefits claims are governed by the Employee Retirement Income Security Act of 1974 (ERISA). This includes group health insurance obtained through your employer. ERISA claims can be very complicated, and if your ERISA healthcare claim is denied, you should immediately educate yourself before jumping into filing any appeals, and, if you can find one, consult with an attorney who handles these types of cases.
In all ERISA benefits claims, the internal appeals process must be completed before filing suit. If the denial is upheld through the mandatory appeals process, there may be additional, voluntary appeal levels available. In court, however, there are only limited remedies available. There will likely be no jury trial, no medical testimony, and no depositions or documents obtained from the insurance company. The court will probably review the insurance company’s claim file, and not much else. Normally, you cannot recover more than the benefits you were owed in the first place. So, for a $50,000 surgery that the medical insurer refused to pay for, the most you will recover in court is likely $50,000. Some courts will allow pre- and post-judgment interest on top of the recovery, but not all. There will not be any punitive damages, pain-and-suffering, mental anguish, or anything like that in an ERISA case.
Healthcare claims are divided into three different categories by the Department of Labor’s ERISA claims regulations: urgent care claims, pre-service claims, and normal post-service claims. 29 C.F.R. § 2560.503-1(m)(2-4). Post-service claims must be decided by the insurer within 30 days, but the insurer is allowed one 30-day extension. Pre-service claims must be decided within 15 days (with a one-time 15 day extension available), and urgent care claims must be decided within 72 hours. No extensions are available for urgent care claims, but if the insurer determines that it does not have sufficient information to decide the claim, it must notify you of the deficiency within 24 hours of receiving the claim, and give you 48 hours to provide the requested information.
Although extensions are only supposed to be taken if necessary “due to circumstances beyond the insurer’s control," in practice these extensions are taken frequently, with little explanation, sometimes late, and often due to purely internal delays. Technically, the insurer’s failure to comply with the regulations in this manner could give you a right to sue without pursuing any further internal appeals. 29 C.F.R. § 2560.503-1(l). In practice, it is usually best to overlook these minor technical violations and complete the mandatory appeals. Usually you will want to avail yourself of the full 180 day appeal window to develop the medical record. You must be given at least 180 days to appeal the denial.
An outright denial is easy to recognize, but in the healthcare arena especially, there are varying degrees of “denial." An exhaustive definition is available at 29 C.F.R. § 2560.503-1(m)(4), but in essence, anything less than a complete approval of the claim can (and usually should) be appealed as if it was an outright denial. For example, health insurers may use “post-payment audits" to demand partial refunds of fees paid to providers. While beyond the scope of this brief article, these practices are “adverse benefit determinations" (denials), and have generated large-scale class action ERISA litigation by medical providers.
So, if you have been denied, and have exhausted the mandatory appeals process, then the window in which you can file an ERISA § 502 suit has opened. When that window closes, however, is a more difficult question. The ERISA law itself does not contain a statute of limitations for § 502(a) claims for benefits. If there is no clause in the policy stating a limitations period, the courts will look to analogous state statutes of limitations, such as for contract actions. Where the insurance contract itself contains a contractual period of limitations, courts will usually uphold those provisions, even if they are shorter than the relevant state-law periods, if they allow people a reasonable amount of time to sue. Limitations periods as short as 90 days have been upheld by the courts in healthcare claims. E.g., _ Northlake Regional Medical Center v. Waffle House System Employee Benefit Plan, 160 F.3d 1301, 1303-04 (11th Cir. 1998). These periods are not necessarily tolled while the claimant exhausts the mandatory appeals, either. _See, e.g., Rice v. Jefferson Pilot, 578 F.3d 450 (6th Cir. 2009).
Once your case is filed in court, that's it as far as new evidence is concerned. At that point, if you haven’t done everything you needed to do earlier, it will all come back to haunt you. The court will likely only be looking at the record that the insurance company had when it made the denial decisions, so if your best medical evidence was never submitted to the insurance company in support of the claim and/or the appeal, then the court will likely never see it. This is part of what makes these cases so difficult. You need to consult an experienced attorney when denied, rather than filing a simple appeal letter with no evidentiary support, and your attorney must know to fully develop the evidence before saying the magic words, “I appeal." Once the insurance company issues its “final denial," the record might be closed forever.